Regional LNG: China seeks to develop 9 LNG terminals

China may build up to nine LNG terminals in the next few years to promote consumption of cleaner fuels, including one near Beijing by 2008 when the city hosts the Olympics Games, a Chinese industry official was quoted by Reuters Tuesday.

"China plans eight to nine LNG terminals in three areas in the near future," said Wang Jianwen, vice president of CNOOC Gas and Power Ltd, a unit of China's state-owned offshore oil and gas producer CNOOC group.

The three areas are the Pearl River Delta in Guangdong province, the Yangtze River Delta in eastern China and the Bohai Bay area, including Beijing, Wang told a regional gas conference in Singapore.

"The central government is very supportive of the plans to do these projects in the economically developed areas," he told reporters on the sidelines of the conference, adding that each LNG terminal usually costs $500-600 million to build, depending on its size.

China is conducting a preliminary feasibility study on building a liquefied natural gas (LNG) terminal near Beijing to help ease air pollution in the capital, he said.

"It is because in 2008 we are going to hold the Olympic Games in Beijing and the government is hungry for clean energy in the Beijing area," Wang told the conference.

China is building its first terminal for the super-cooled, compressed natural gas in Guangdong and its second terminal in the southeastern province of Fujian.

The Guangdong terminal is expected to start importing LNG, which is transported in special tankers, from Australia as early as next year, while the Fujian terminal is scheduled to start receiving LNG from Indonesia in 2007.

China is also seeking to import LNG from Iran as Beijing aims to boost use of natural gas to seven percent of its energy mix in 2010 from three percent.

Coal fires three-quarters of China's power plants and pollution from coal causes an annual economic loss of 100 billion yuan (US$12.08 billion), a senior executive from a major Chinese coal producer had said.

Emerging demand from China, and other major markets such as the United States and India, has sparked strong competition among LNG suppliers, including Australia, Indonesia, Malaysia, and the Middle East, in which global oil majors such as BP Plc have made heavy investments.

CNOOC's Wang said China was also studying the possibility of building LNG terminals in Shanghai, the eastern province of Jiangsu, the southeastern province of Zhejiang and northeastern port city of Dalian.

The Zhejiang provincial government has agreed to build a terminal to import three million to four million tonnes of LNG a year, and it was currently selecting a location for the project, he said but did not elaborate.

CNOOC group, the parent of Hong Kong and New York-listed CNOOC Ltd , will be involved in some of the proposed projects. If approved by the central government, the projects will likely source LNG from Russia, the Middle East, Indonesia and Australia, he said.(*)